Davos Report 2023 final - Institute for Policy Studies

Extreme Wealth:

The growing number of people with extreme wealth and what an annual wealth tax could raise.

Summary Report

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TAXING EXTREME WEALTH

THE GROWING NUMBER OF PEOPLE WITH EXTREME WEALTH AND WHAT AN ANNUAL TAX ON THE WORLD'S MULTI-MILLIONAIRES

AND BILLIONAIRES COULD RAISE

January 18, 2023

The world faces multiple crises - from economic hardship and ecological decline, to social unrest and threats to democracy. Governments need to make bold investments to protect the rights and livelihoods of citizens and to build fairer and more sustainable societies. This report shows that the revenue to fund such investments is available if we begin to tax the world's wealthiest people, who, as a group, have seen their fortunes rise rapidly over the last ten years. But beyond the objective of raising revenue, taxing the wealthiest among us gets to the root of our crises - that of widening inequality. For this reason, it is essential to use wealth taxation to redistribute wealth and power in our societies. To fundamentally close gaps in extreme wealth and reduce the total numbers of billionaires and multimillionaires to address the catastrophic levels of inequality and its consequences.

Using data sets from Forbes and Wealth X, Patriotic Millionaires, the Institute for Policy Studies, Fight Inequality Alliance, and Oxfam have calculated estimates for how many people in the world now have net wealth in excess of $5 million, $50 million, and $1 billion as compared to ten years ago, as well as revenue estimates that could be raised if a progressive wealth tax was implemented on the world's richest people. All figures in this report are in USD.

THE KEY TRENDS ARE:

? The data shows that the wealthiest have seen their wealth explode over the last decade. The total number of people in the world with at least $5 million in net wealth has grown by 52.9 percent. Individuals with a net wealth of $50 million or more have grown at a similar rate of 50.3 percent. Meanwhile, the global billionaire class has more than doubled, 103.5 percent to be exact. And billionaire wealth has skyrocketed by 99.6 percent. This is a gain of more than $5.9 trillion.

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Source: Based on Forbes Billionaires List and the Forbes Real Time billionaires list. We compare the annual Forbes list published March 2012 with the Forbes real time list as of November 2022. All dollar amounts are constant.

? The potential revenue from a net wealth tax on the wealthiest is substantial. Globally, we modeled the annual revenue from an annual progressive wealth tax of 2 percent for those who have a net wealth of $5 million or more, 3 percent for $50 million or more, and 5 percent for those with more than $1 billion. We found that an annual tax of this nature could have raised more than $1.7 trillion in 2022 alone. Approaches to taxing wealth and levels of wealth taxation would be country-specific, and thresholds would vary from country to country - these estimates are only indicative. Nevertheless, this shows just how much revenue could be raised.

? There is growing public demand for wealth taxation. There is growing public support for taxing wealth. Numerous polls over the last six years have been conducted by various agencies, including Ipsos Mori, Glocalities, Pew Research Center, and the OECD. A range of questions was asked in each relating to the levels of concern about economic inequality and the public appetite for increasing taxes on the wealthiest. In reviewing all of these polls, we found that the general public has taken notice of the inequality crisis in all G20 countries and wants their lawmakers to do something about it. Polls conducted in the last six years in all G20 countries (excluding the European Union) ? Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States ? indicate overwhelming levels of support for reducing inequality and policy measures that would raise taxes on the richest.

? Economists say inequality is rising and see their country's tax system as both a cause and possible cure. As part of this report, we conducted a survey of economists' views on inequality and tax. 135 economists from 40 countries responded. Their responses showed that: - 87 percent of surveyed economists think that the current cost of living crisis is increasing inequality in their country and 95 percent of surveyed economists say they are concerned about rising inequality in their country. - 71 percent think that rising inequality in their country is partly caused by falling taxes on the rich, and 73 percent think that the rich pay fewer taxes in proportion to their income than the average citizen in their country. - 71 percent think there is scope for increasing the taxation of rich people in their country over the next five years.

HOW RICH DO YOU HAVE TO BE TO BELONG TO THE TOP 1 PERCENT AND ABOVE?

Globally, those with more than $1 million are considered to be in the top 1 percent of the population. For the purposes of analysis at the global level, we have based our calculations for extreme levels of wealth to be those with more than $5 million - the top 0.05 percent of the global population - although the assessment of extreme wealth levels varies from country to country.

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EXAMPLES FROM DIFFERENT COUNTRIES The following 20 countries provide an account of the growing number of people with extreme levels of wealth over $5 million, $50 million, and $1 billion over the last ten years, and what taxing that wealth could raise.1

1 All country-level numbers are compiled and produced using data on wealth from Wealth X and Forbes Billionaires list, and deflated using US Bureau of Statistics CPI. All other data is compiled from various other sources. A full methodology note with all sources listed for each country-level figure can be provided upon request.

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